Global Atomic Files Letter to Shareholders, Highlights Company’s Strong Performance Under Current Management and Incumbent Board
- Warns shareholders of activist’s lack of experience and lack of plan
- Reminds shareholders to vote only the WHITE proxy FOR Global Atomic’s nominees, in advance of the voting deadline on June 18, 2018 at 10:30 a.m. (Toronto time)
TORONTO, June 01, 2018 (GLOBE NEWSWIRE) -- Global Atomic Corp. (“Global Atomic” or the “Company”), (TSX-V:GLO) today filed on SEDAR a letter to shareholders ahead of its annual and special meeting of shareholders to be held on June 20, 2018.
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The letter, which will be mailed to all Global Atomic shareholders, details the significant progress and accomplishments achieved under the leadership of the Company’s board and management team. It also addresses activist Greyling Investments’ (“Greyling”) high risk agenda to take over the Company without a credible plan.
Shareholders are encouraged to review the letter (included below) and vote the WHITE proxy “FOR” all 6 of Global Atomic’s qualified and experienced directors: Stephen Roman, Paul Cronin, Richard Faucher, George Flach, Derek Rance, and Asier Zarraonandia Ayo.
Don’t wait, voting is fast and easy – please vote well in advance of the proxy voting deadline of Monday, June 18, 2018 at 10:30 a.m. (Toronto time). If you have questions or need help voting, contact Kingsdale Advisors at 1-888-518-6554 or at contactus@kingsdaleadvisors.com.
The full contents of the letter are included below:
June 1, 2018
Dear Global Atomic Corp. (GLO or Company) shareholder,
Your Company is being attacked by an activist. Greyling Investments, Inc. (Greyling) is seeking to seize control of your Board and your Company on an audacious pretext that is frankly unsupportable. Their case for change is carefully fabricated and their “plan” for GLO is without substance.
We believe you have a clear choice before you: The current Board and management have a plan in place that is working, industry experience, and a track-record of value creation. In stark contrast, Greyling has no plan and no experience in developing a uranium asset and its case for change is misleading and based on false information.
Join other shareholders to protect your company and vote your WHITE proxy today.
Performance
A group seeking to replace a Board must make a compelling case for change. By cherry-picking a date range that suits their purpose, Greyling claims that the share price has declined by 40% and uses this as their foundational argument for an entirely new Board. The facts are quite different. As illustrated below, GLO has not only generated positive Total Shareholder Returns (TSR) over 1, 3 and 5 year periods, but has also outperformed its peers and relevant indices over the same time periods:
An infographic accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/da74e56e-e029-4918-a0c8-4ef7ae9a9c4e1
Greyling was not supportive of the acquisition of Global Atomic Fuels Corporation (GAFC) and was suggesting this transaction was the cause of the temporary share price decline in late 2017. Ironically, it was our zinc concentrate business that impacted the stock price and not the uranium business. More correctly, the political uncertainty in Turkey created by (now) President Erdogan and diplomatic friction between Turkey and the United States had a direct impact on our income generating Turkish asset and consequently our stock price. These same events also impacted the Turkish stock index (BIST).
The dissident’s claim of share price underperformance is intentional cherry-picking, their assertion that temporary price erosion was due to the GAFC acquisition is false, and their purported case for Board change is without credibility.
The Current Plan
The total shareholder returns referenced above are the result of thoughtful strategic planning and diligent operational execution by the current board and management team. GLO has two businesses. The current Board and management team have the corresponding business plans to create value that we want to recap for all shareholders.
Strategy Related to the Zinc Concentrate Business
Our zinc concentrate business consists of a 49% share in Befesa Silvermet Turkey (BST) which is operated by our joint venture partner Befesa, who own the 51% share. Our strategy as agreed with our partner is to invest in the best people, processes and technology to generate processing efficiencies and economies of scale.
We were pleased to announce the planned expansion and modernization of the processing plant in Turkey. This investment of approximately USD $26MM will be funded from free cashflow and existing credit facilities, with long lead time purchases commencing immediately, construction to start in February 2019 and to be completed by September 2019. The investment will deploy the latest available technology and will nearly double our processing capacity. For shareholders this is expected to equate to larger top line revenue and bottom line profit, which will come back to us as a joint venture dividend. The Turkish steel industry that supplies our raw material is expanding and well positioned to supply the Middle East. This creates long term opportunities for further expansion.
Strategy Related to the Uranium Business
GLO’s uranium division consists of six exploration permits covering around 750 km2 in the Republic of Niger. The DASA deposit that we discovered is turning out to be a truly world-class uranium asset. It is one of the largest and highest grade uranium deposits ever found in Africa, with proximity to existing processing facilities and a reputable buyer eager to acquire the ore when we get to production.
Right now, we are in late stage resource definition with a near term plan to move us to production and cashflow generation. On completion of the pre-requisite reports we will apply for a mining permit in Q4, 2018. The mining permit will be effective for an initial 20-year period, and renewable thereafter until the resource is depleted.
Critical to our success in Niger is our relationships with the Government and local community. We enjoy excellent relationships with the President, Minister of Mining and other government and industry officials, visiting with them several times a year. Any disruption to these critical relationships poses a very real threat to our ability to secure the mining license and effectively the value of this great asset.
Your Current Board
Both GLO businesses are at critical junctures in executing transformative changes that will deliver tangible value. Your current Board has overseen the strategic plan of the Company that has created shareholder value shown above. The steps we are taking are delivering tangible additional value from both our zinc concentrate and uranium businesses in the near term. Our Board has significant skin in the game represented by its controlling of 16.67% of the GLO stock.
In contrast, the Greyling nominees lack adequate industry experience, local contacts, government relations, mine development and financing experience to oversee either of GLO’s businesses.
Greyling Has No Plan Nor People To Execute One
To say that Greyling has no plan is charitable based on their dissident circular. They may have a hidden agenda but they have no plan. Instead, in their circular, they provide a vague summary of what they call a ‘plan’ explaining that they will undertake a review of strategic alternatives for GLO’s two businesses. This is often code for saying a company is for sale. Is their plan to liquidate the Company’s assets just before the value generating initiatives come to fruition? The significant insolvency experience of 3 of their Board nominees, is concerning and suggests such a strategy would be in their comfort zone.
Based on their circular, Greyling is asking you to throw your Company into chaos and trust them and their nominees to sort it out. This is a frightening proposition given that Greyling’s nominees have limited experience in either of our industries.
No plan plus no experience is a formula for failure and value destruction.
VOTE YOUR SHARES TODAY
Do not let a self-interested activist with no plan and no experience take over your Company. Vote the WHITE proxy to protect your investment, in advance of the voting deadline on June 18, 2018 at 10:30 a.m. (Toronto time).
Voting is now open. Vote your WHITE proxy or VIF. Please call 1-888-518-6554 if you need help voting or have questions.
Sincerely,
The Board of Directors of Global Atomic Corporation
Appendix – Setting the Record Straight
SETTING THE RECORD STRAIGHT:
On Mr. Stephen Roman’s track-record: Mr. Roman has created billions of dollars in shareholder value for investors
Mr. Roman has more than three decades of resource industry experience as an entrepreneur, financer, Chairman and CEO. In addition to his successes as founder of the merged companies – Silvermet Inc. and Global Uranium Corporation - Mr. Roman was integral in the development and success of i) Gold Eagle Mines Ltd., which was sold to Goldcorp in 2008 for $1.5 billion after a major gold discovery in Red Lake, Ontario. Mr. Roman and his team received the PDAC “Bill Dennis Award” in March 2016 for this gold discovery; ii) Verena Minerals, which Mr. Roman founded and took to a market value of $250 million; and iii) Harte Gold, whose market value of $5 million has increased to approximately $250 million since Mr. Roman and his team have taken over management.
In Greyling’s circular, the dissident spotlights Mr. Roman’s time at Exall Energy. Exall Energy – like a lot of small oil and gas companies – went into receivership after a major bank disposed of its oil and gas portfolio following the global collapse of oil prices in 2015.
Mr. Roman’s track record is evidenced by the large number of shareholders who have invested in Global Atomic based on his leadership alone.
SETTING THE RECORD STRAIGHT:
On loans from insiders: Our Board and shareholders have stepped-up
At various times throughout our Company’s history – when there’s been a lack of willing external lenders – we have offered shareholders an opportunity to participate in financing events. At all times, these debentures were offered to ALL shareholders including management and Board. And, on some occasions, members of our Board exhibited leadership, stepped up and helped the Company by participating in these financings. In 2015 for example – while still private, the Company required short-term bridge financing prior to a US$32 million potential equity deal, which did not materialize – several shareholders, including Board members, stepped up to participate.
The debts of the uranium operations were factored into the relative values of the zinc and uranium operations to arrive at a fair exchange ratio to the shareholders in the merger. Importantly, one of the conditions of the merger with Silvermet Inc. was that all debts would be paid and cancelled once the dividends from Turkish operations were received. This was completed on May 31, 2018.
SETTING THE RECORD STRAIGHT:
On asset write-downs
Greyling is critical of the asset write-downs associated with the GAFC merger. This shows independent members of the Board did their due diligence and assessed the value of GAFC pre-merger and laid out the proper exchange ratio for the merger at a much-reduced value in favour of Silvermet shareholders. While there may have been a write down on the initial investment, Silvermet continually traded at a severe discount to its actual value. Global Atomic’s value was depressed as a continuing fallout from the Fukushima disaster in Japan which crippled uranium prices. Currently, under the combined company, both assets have been recognized as substantial value creators and the stock is expected to reflect an improved market value as the assets continue to be developed.
About Global Atomic
Global Atomic is a TSX Venture listed company providing a unique combination of high grade uranium development and cash flowing zinc concentrate production. Global Atomic’s Uranium Division includes six exploration permits in the Republic of Niger covering an area of approximately 750 km2. Uranium mineralization has been identified on each of the permits, with the most significant discovery being the DASA deposit situated on the Adrar Emoles III concession, discovered in 2010 by Global Atomic geologists through grassroots field exploration. The DASA deposit is currently under development in order to begin shipments to Orano Mining’s uranium processing plant in Arlit, Republic of Niger, under an MOU signed in July 2017.
Global Atomic’s Base Metals Division holds a 49% interest in the BST joint venture, operating a facility located in Iskenderun, Turkey that converts EAFD (Electric Arc Furnace Dust) into a high grade zinc oxide concentrate which is sold to zinc smelters around the world. The Company’s joint venture partner, Befesa Zinc S.A.U. (“Befesa”), holds a 51% interest in and is the operator of BST. Befesa is a market leader in EAFD recycling, capturing approximately 45% to 50% of European EAFD market with facilities located throughout Europe and Korea.
Advisors
GLO has retained Norton Rose Fulbright Canada LLP as its legal advisor and Kingsdale Advisors as its strategic shareholder and communications advisor. Global Atomic will pay fees of approximately $175,000 for strategic advisory and proxy solicitation service plus certain contingent success fees in addition to certain out-of-pocket expenses.
Media Contact:
Kingsdale Advisors
Ian Robertson, 416-867-2333
Executive Vice President, Communication Strategy
irobertson@kingsdaleadvisors.com
Cell: 647-621-2646
The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raise additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws.
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1Source: Bloomberg Finance LP
Company peer group includes: Laramide Resources Ltd.(LAM CN Equity), Skyharbour Resources Ltd.(SYH CN Equity), Azarga Uranium Corp.(AZZ CN Equity), Prophecy Development Corp.(PCY CN Equity), Kivalliq Energy Corp.(KIV CN Equity), Forsys Metals Corp.(FSY CN Equity), Virginia Energy Resources Inc. (VUI CN Equity)